Shock as Equity Changes Existing Loan Rates

It has emerged that banks can now review the rates of current loans under the newly approved risk-based lending model by the Central Bank of Kenya(CBK). 

The model was approved by the CBK to allow banks rate borrowers on the basis of their risk in a bid to improve lending and avail credit to small businesses and individuals, who have been struggling to access formal credit.

However, in an online tweet shared by Scope Markets Kenya, markets analyst Rufas Kamau, it has emerged that under the model, Equity Bank can revise rates for current loans. He lamented, '' Risk-based lending they said. Now they can jack up your existing loan by 5% without a blink. God save us all.''

This comes on the back of recent reviews of interest rates in the banking industry that now sees banks charge an average of 17-18 percent per annum as interest charged from 13-14 percent on the back of rising inflation in the country.

Equity Bank was among the first banks in the country to have their risk-based lending model approved by the CBK with the lender putting it into action late last year through an official communication to its customers.

This will hit bank customers hard especially after the regulator also approved the return of transaction charges from Banks to mobile money wallets after Uhuru Kenyatta's administration lifted them to cushion the economy from the effects of the Covid-19 pandemic.